Interview with Dr. Inaba - President and CEO Fanuc Ltd.

12/05/2010

With Fanuc Ltd.. Japan in the production of CNC and servo motors running at full speed: With a 100% capacity utilization the Japanese try  to satisfy the growing demand - especially from Asia. Fanuc CEO Yoshiharu Inaba explained the plans of the company.

Fanuc CEO Yoshiharu Inaba: "Our manufacturing facilities are located exclusively in Japan. As a company, a manufacturer of factory automation and robots, we must prove that the use of robots reduces costs and that also companies in high-wage countries can flourish in the international competition. "

Mr. Inaba what is your strategy for the automation of your factories?

Inaba: Our manufacturing facilities are located exclusively in Japan. As a company, a manufacturer of factory automation and robots, we must prove that the use of robots reduces costs and also companies in high-wage countries to flourish in international competition. We use so many of our robots as possible. In our factories, we employ about 500 people and 1400 robots are used. In future only the number of robots will be rising.

A few years ago you had expected that the market will begin to rapidly robot by coupling with machine tools to drive. What has become of it?
 
Inaba: It takes still longer than we have assumed. In our house we have shown a development issue between a CNC and a robot this year. Of course, we improve the software and functions continuously. With success: The business is getting easier.
 
How many robots do you sell in this area?

Inaba: Currently, not many. But the customers understand the benefits of pairing the machine tools and the robots always better. In our production we have already installed many such systems in cooperation with major machine tool manufacturer. This allows an unmanned operation of up to 720 hours in our production machining.

Is that a concept for markets outside of Japan?

Inaba: Yes. Many mechanical engineers in other countries are interested. In China, for example, there is a shortage of workers in the coastal regions, especially because at present the domestic regions of the country are to be developed. Therefore, there are on the coast of Chinese manufacturers who are interested in such robotic solutions.

On another subject: How has the global recession impacted your company?

Inaba: In the aftermath of financial crisis of 2008, the entire world economies submerged almost simultaneously in a recession. The recession was hard for Fanuc. Our revenues decreased by 17% in fiscal 2008 and by 35% in fiscal 2009. Currently we are seeing a recovery that mainly results from orders from China. Before the recession the main markets were in Japan, Europe and the USA. Now, there are four main markets and the largest single market is the Chinese. Also for Fanuc, in terms of units sold. China by the production figures of the past year has become number one of the production in the machine tool world . Therefore the Chinese have pushed ahead of the Japanese, who were in the lead for over 27 years.
 
The Japanese industry had suffered more from the recession and has fallen to third place. Since, however Fanuc have very strong sales and service structures in the countries of China and India, we benefited from this strong growth markets. We have managed to implement our presence in a large market share in these countries. This is the reason that we recovered quickly. The markets of Japan, Europe and the U.S. are still weak. But we are the market leader in China and India for CNC and servo motors. And now we have reached more than 80% of the orders levels of 2008. In the results of the year 200 we have not achieved the 80% only, because the first half was bad. The result of the second half, however, was strong and the growth continues in this financial year

Is it your observation that other markets are where the signs of growth?

Inaba: The Indian market is catching up. The Korean market and the Taiwanese are also very active. And the Japanese market is slowly moving. The U.S. market for machine tools is still a large market, but there are no longer many machine builders there. But the American market is moving again, which is good for Japanese and European manufacturers of machine tools. The wholesalers, who in 2008 had too much stock now build up their stocks  again.

What are your expectations for this year and next year?

Inaba: The Chinese market is still very strong and the machine tool industry is still growing rapidly - probably over 20% this year. The forecasts for GDP growth are 9.5% - the business of machine tools will grow faster. The Chinese government has decided to re-allocate money for the market. The Taiwanese and Korean will still come back stronger. The Japanese market will not be as strong as in 2008, but it will get better results for 2009. It is likely to stabilize in 2011 to about 80% of that of 2008. For Europeans, there will be a challenge to achieve in the year 2011 the results of 2008

How has the boom in China affected Fanuc?

Inaba: For CNC and servo motors we run our factory at full capacity to reduce our delivery times. The time is right now our biggest problem. Business with CNC, servo motors and Robomachines is going well. Every month we can produce 100 000 servo and spindle motors in 2000 different variants as well as 20 000 CNC. As it is difficult to get the materials used in the production. My main task is the time to obtain enough products from our suppliers to keep our factories running.
 
Do you expect after these successes that the growth proceeds mainly from Asia?

Inaba: The Asian market is very strong and will lead the recovery of the machine tool industry in the whole world. The automotive industry, energy production and infrastructure grow. The Indian market will follow the pattern of the Chinese. In the U.S. there are innovations in the automotive industry, which focus on more efficient engines and electric vehicles. That is, there will there be more demand for machine tools.

Which customer segments will grow the most?

Inaba: We are suppliers of CNC and servo motors. Our direct market sectors that are tied to the automotive industry. 60% of the tools are used there. The infrastructure such as energy production or construction are also important industries. On the Chinese mainland all these sectors are running well. The need for machine tools in the production of household appliances is growing, just as in the semiconductor and display production.

What are the goals of your company's European?

Inaba: We now have Fanuc CNC Europe, which has been one of the resolution of our joint venture with GE Fanuc to 100%. We can focus all our efforts on developing this market. It is very important that all employees have the same goals. In Italy and Switzerland, the Fanuc CNC Europe is already very strong. In Germany, however, we must expand our efforts. With Christian Jung, Holger Halas we have established two new leaders. They have both previously worked as engineers in the development laboratories in Japan and have a "communications pipeline" with the staff here.
 
You know the Fanuc position very well. The market in Germany is difficult for us, but it is the largest in Europe. Now, however, we have the right people and the right products to develop this market. As you have seen today on the house issue, we have developed powerful new products like the 30i-B series. I think we now have the condition to clear in Germany within three years of our current market share of about 20% extended.